Supply and demand seem to have gone out the window this week, as markets sold off dragging the prices for oil, cotton, copper and silver down sharply. On Thursday, oil prices fell a staggering 8.6 percent on the day to below $100 per barrel. Silver, which had touched $50 per ounce in April, tumbled more than 30 percent on the week. Wheat and sugar took it on the chin and copper skidded six percent in two days. The spectacular fall in commodity prices last week contrasts with their steady ascent over the last few months as investors bought hard assets of all stripes as a haven from a tumbling U.S. dollar and on optimism about global growth.

Aggressive moves by Asian governments and central banks to reign in growth, coupled by the CME Group's decision to raise margin requirements for silver three times in a single week, spooked the market causing a rout for commodities. It's certainly hard to chock up the commodities' collapse to breaking news on supply and demand, especially when you consider that the sell off was broad-based. There is little, if any, relationship between mines, farms and fields and the commodities they produce.

Silver's dramatic one-week plunge caught investors' attention since it signalled that regulators were moving aggressively to curb speculation in an over-heated commodity market—with implications across the board. With the physically-backed iShares silver ETF (SLV) becoming one of the NYSE's most actively traded securities, regulators stepped in to dramatically increase margin requirements for silver futures; worried that silver had moved too far, too fast. And with retail investors driving a greater and greater percentage of the trade, the CFTC's message was clear “You will need to pay to play.” It was also eerily reminiscent of the price collapse that silver experienced in 1980, that signalled the end of the decade long inflation-stocked rally into commodities.

For some skeptics, the collapse in silver is just another data point that illustrates that we are at the top of the commodity cycle. For others, it's the mammoth $12 billion initial public offering (IPO) of Glencore, a privately held commodities powerhouse, later this month that signals a top in the commodity market.

But while the recent sell off surely signifies a short term top, it's hard to claim that the bull market in commodities is dead and gone. Over the week, investors rethought their tolerance for risk as faster than expected rate hikes in India , joined with earlier moves in China and other emerging markets, reminding investors that there are limits to global growth. The European central bank failed to boost interest rates as had been widely expected, which helped reverse the trade into the euro. This move sent the U.S. dollar flying with the dollar index rising 1.5 percent in a single day. With the U.S. dollar soaring and the gradual realization dawning on investors that emerging market economies were taking steps to slow growth, the rout in commodities was on.

But behind the headlines, is a very strong case for continued commodity optimism. Rather than facing the prospect of a commodity Armageddon, we are likely in the midst of a mid-cycle correction. In spite of the efforts by the Chinese government to reign in growth, they are unlikely to curb growth to such an extent that the very high single digit growth rates they are experiencing now, slump toward the low single digit range. Furthermore, supply remains constrained with visible multi-year deficits in many of the commodities that were badly mangled in the recent sell off. China still has massive plans for rural infrastructure, development in inland provinces and some high-tech industries, which in themselves could lend support to further commodity strength.

The decline wasn't consistent across the board. Silver got whacked and so too did oil, as the prospect that the Middle East might descend into civil war receded. The declines were largely relegated to the commodity futures markets themselves, with the commodity-producing equities hanging in reasonably well. As I point out in my book The Little Book of Commodity Investing , commodity-producing stocks and ETFs are a savvy way for most investors to participate in the commodity bull market.

Add to this the fact that last week's plunge was unremarkable in the context of other sell offs commodity markets have experienced. Last Thursday's 8.6 percent drop in oil prices was only the 30 th worst single day tumble since 1983. And while silver fell hard on the week, gold's fall was more benign suggesting that both precious metals might rally back sharply in the weeks to come as the fundamentals of too much central bank generated liquidity once again weigh on the markets.

As I pointed out last week on CNBC's Fast Money , the way to play silver is through gold companies that have significant silver exposures. The companies I recommended are trading at a discount to their gold peers and are being given credit for their silver streams. As an investor, you benefit from buying an undervalued asset with possible upside from the market of the value of their silver and gold prospects.

A correction in the commodities markets was probably long overdue. For my money, the current plunge represents an opportunity rather than a shot across the bow. Investors should look to acquire silver, oil, copper and the corresponding equities once the dust settles on this correction.

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